Brown bid to woo small firms

Thursday 28 March 2002 00:00 BST

CHANCELLOR Gordon Brown today signalled a series of Budget measures to help small businesses set up in deprived areas. He indicated his Budget statement on April 17 would include stamp duty exemptions on commercial properties in poor areas, tax breaks for firms which invest in deprived communities and a flat rate VAT scheme, cutting the cost of compliance for small businesses.

The Chancellor unusually flagged up the measures in advance because of the late Budget this year so that firms would be notified before the end of the current tax year.

It follows the announcement on Tuesday of tax breaks worth an estimated £600m for big business.

Mr Brown, addressing a Transport and General Workers' Union conference in Leeds, said he wanted to create a 'more favourable environment' for firms setting up in areas of high unemployment.

The new measures, which were foreshadowed in the Pre-Budget Report in October, are:

A community investment tax credit, offering tax relief for investment in enterprises in disadvantaged areas,

Extending the disadvantaged areas' stamp duty relief to commercial transactions incorporating six or more dwellings and commercial leases.

Introducing a flat rate VAT scheme for firms with a turnover of up to £100,000, cutting the compliance costs for 540,000 businesses by up to £1,000.

Earlier, when asked about the role of the unions and Labour backbenchers, Mr Brown said the Government would not be diverted from its aim of promoting an enterprise culture.

'The gain is in jobs, rising living standards, greater stability, low interest rates and low inflation and an ability, through creating more wealth, to fund our public services.

'So we are not going to be diverted, whatever the pressures that people wish to push on us, we are not going to be diverted from the wealth creating agenda, the importance that we attach to creating a more enterprising economy and making the productivity gains,' he told BBC Radio 4's The World at One programme.

Following his speech at Leeds United's Elland Road football ground, Mr Brown answered questions from conference delegates, who asked him how he was going to protect existing businesses from foreign competition as well as helping new enterprises.

He said: 'There is no hope for us if we simply rely on protectionism. What that would mean is that other countries will grow their industries and we will not be able to compete in the high value areas in the future.

'So the only alternative is that we have to invest in equipment, we have to move up on the technology and we have to be able to compete in the high value added precision goods, on the new technology products.

'If we don't do that no amount of protectionism in the short-run will prevent us losing out in the long-run.'

TGWU assistant general secretary Jimmy Elsby told to the conference: 'We also want the message to go from this conference to employers to say unequivocally that the trade unions are not the enemy. We are builders, we are motivators, we are the people who will work with you.'

The British Chambers of Commerce welcomed Mr Brown's announcement, but said other factors, such as business crime and the availability of insurance dissuades firms from setting up in some areas and a more wide-ranging policy was required.